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With home prices still near record highs and mortgage rates still more than double what they were a year ago (despite trending down in recent weeks), affordability remains the number one challenge for potential homebuyers. While consumer sentiment on the housing market improved slightly, it remains near the all-time low set in October. With lackluster buyer traffic, builders are continuing to cut prices and offer sales incentives, while also scaling back in production.
Consumer sentiment on the housing market inches up for first time in 9 months: According to Fannie Mae’s Home Purchase Sentiment Index®(HPSI), elevated mortgage rates continue to be the main impediment to housing sentiment. The latest index reading from November, despite breaking a nine-month declining streak and inching up 0.6 points to 57.3, remains just above the all-time low set last month. Compared to the same time last year, the index is tracking 17.4 points behind. While four of the six index components increased modestly form the previous month, including improved homebuying and home-selling conditions as the market has become less competitive, majority of consumers (62%) still expect mortgage rates to rise over the next year. Higher mortgage rates, and diminished affordability as a result, were the key factor holding consumers’ housing sentiment near all-time lows.
Builders are cutting prices & offering incentives: Single-family home builders have been opting to provide incentives and even cut prices in an effort to get buyers back on the market. In November, according to the National Association of Home Builders and Wells Fargo’s Housing Market Index (HMI), 35% of single-family home builders reported reducing their prices and nearly 3/5 were offering special sales incentives. While these percentages seem relatively high compared to a few months ago, they were still far from where they were back in 2008 during the great recession when around 50% of builders were cutting prices and almost 3/4 builders were offering sales incentives.
Mortgage rates continue to drop: The 30-year fixed-rate mortgage (FMR) has been on a downward trend for four consecutive weeks now. As of December 8, the 30-year FRM averaged 6.33%, down from 6.49% the week prior and down from the most recent peak of 7.08% recorded about a month ago. This marks a decline of three quarters of a point over the last month which is the largest since 2008. While mortgage rates have been cooling as increasing concerns of slower economic growth and an expectation that the Fed will begin easing its rate hikes ahead, homebuyer sentiment remains low.
With interest rates starting to ease we are seeing some new opportunities for buyers and sellers. Lenders are offering options for home buyers to buy down their interest rate and sellers in some cases are offering credits to help buyers obtain a more affordable rate.
If you would like to discuss today's market and whether now is a good time for you to buy or sell, give me a call at (562) 900-9430.
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5250 E. Lomita Ave
Orange 92869
32,924 SqFt of Residential Land | $725,000
Located on a private street with custom homes, this 32,924 SqFt lot comes with plans for a 5000 SqFt custom home featuring amazing views.
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635 E Bonds St.
Carson 90745
3 Beds | 2 Baths | 1,406 SqFt | $650,000
Great opportunity to own this 2 story 3 bedroom, 2 bath home with updated kitchen.
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853 E. Helmick St
Carson 90746
4 Beds | 2 Bath | 1,612 SqFt | $820,000
Welcome home to this beautiful 4 bedroom home in a highly sought after neighborhood in Carson.
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819 Atlantic Ave. #1
Long Beach 90813
2 Beds | 2 Bath | 1,219 SqFt | $565,000
Absolutely beautiful 2-story condo located in prime Long Beach just blocks away from downtown and the beach.
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942 N. Loma Vista Dr.
Long Beach 90813
2 Beds | 1 Bath | 1,158 SqFt | $785,000
Beautifully updated Craftsman home located in the Historic Willmore District overlooking Drake Park on a huge 8,536 sf lot.
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4271 Petaluma Ave.
Lakewood 90713
2 Beds | 1 Bath | 949 SqFt | $840,000
Looking for a home that is in pristine condition, immaculately clean, open, bright & cozy, in a premier location, on a tree lined street and with "wow factor" curb appeal and reasonably priced? Look no further.
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1210 E 11th St.
Long Beach 90813
2 Beds | 1 Baths | 702 SqFt | $550,000
Must see remodeled two-bedroom one bath home in Long Beach! Close to schools, shopping, restaurants, and freeways this home is conveniently located to all.
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100 W 5th St #3C
Long Beach 90802
3 Beds | 2 Baths | 2,147 SqFt | $955,000
Amazing loft at the Kress Lofts in Downtown Long Beach. This was the architect's home and features the largest floor plan in the building.
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